COURSE MODULE ON FRONT OFFICE OPERATIONS WITH LABORATORY

Module 4: ROOM RATE STRUCTURE

LEARNING OUTCOMES

1. Understand room rate designations

2. Determine the different types of hotel room rates and meal plans
3. Recognize the different methods of calculating room rates
4. Explain the Hubbart Formula
5. Know how to make rate measurements

MODULE CONTENT

1. Introduction
2. Types of Hotel Room Rates
3. Meal Plans
4. Room Tariff Fixation
5. Basis of Pricing
6. Hubbart Formula

INTRODUCTION
Choosing a standard room rate for a hotel is one of the difficult tasks since the chosen rate needs to
be able to generate income and cover other expenses, like administrative, overhead, and utilities costs.

The cost or price charged by the hotel or lodging sector for overnight lodging is sometimes referred to as
the room rate. Assuring an effective room rate in accordance with a number of market-sensitive factors is often
the responsibility of the front office department and the sales and marketing department. The following are the
key market-sensitive factors:

 Anticipated sale rooms

 Costs incurred to outperform market competition
 Hotel management
 Investment opportunities in taxes
 Price responsiveness
 sales and marketing effort

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Every room category at a hotel is often assigned a standard rate known as the rack rate (also known
as the retail rate of a guest room). Despite its high cost, rack rate does not necessarily guarantee the hotel will
make money. Due to different room pricing schedules, room kinds, patterns, and designations, the rack rate for
a room may vary.

DIFFERENT TYPES OF HOTEL ROOM RATES

Each hotel has a unique rate structure, which is the sum of all the rates that hotel offers. Of course, the
actual monetary value will differ depending on the kind of hotel, the kind of location, the size, and the market
circumstances.

Based on specific criteria, a value is assigned to each room rate under the rate structure. The phrase
"room rate designation" refers to the rate ceiling within the overall structure.

It's essential to comprehend each of the several rate designations within the structure if you want to
maximize room revenue. The rate designations that managers provide in a hotel's pricing structure must be
reviewed on a regular basis.

Beside standard rack rate, other room rates are approached or developed in hotel based on certain
factors (ex-particular season of room sale, prospective sales of room etc.) with a view to rule in Geographical
market.

1. Rack Rate: Standard pricing for each type of room that is made available to guests. Rack rate refers to
the standard price for a specific kind of lodging before any discounts. Usually provided to walk-in
visitors.

2. Corporate Rate: This tariff is being promoted in order to draw in the business market segment. It often
costs 10 to 20 percent less than the rack rate.

3. Seasonal Rate: The rest of the year is a slow time for tourism, with places like beaches and hill stations
seeing considerable traffic during specific times of the year. Hotels do not provide discounts during the
busy season; instead, they may impose a higher room rate known as the seasonal rate.

4. Advance Purchase Rate: The advance purchase pricing is a relatively new idea in the hotel sector,
while being common in the airline sector. When a room is reserved in advance, there is a significant
discount on the rent. For instance, a hotel might offer more discounts for reservations made one month
in advance as opposed to those made only one week in advance.

5. Week Day /Weekend Rate: Regarding the days of the week, several hotels see a variation in their
occupancy level. There can be a higher demand for hotel rooms on some days of the week. In resort
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and vacation hotels, weekend rates would be higher than weekday rates because weekend demand for
rooms is higher. If it were a for-profit hotel, the situation would be the opposite.

6. Day and Half Day Rate: The day rate charged to a person who does not remain the night at a hotel is
less expensive than the rack rate. For instance, if a guest checks in at 10 am and leaves the same day
at around 5 pm, he may be charged the day rate. An overnight visitor may occasionally just want to stay
for a maximum of five hours. The term for this is half-day rate.

7. Group Rate: Hotels give discounts to large groups (more than 15 people) since they bring in a lot of
business. The group rate is determined by the number. of group members and how frequently they visit.
The hotel's sales staff and the group representatives haggle over the price.

8. Tour Group: These are significantly reduced rates for a wholesaler that runs a number of trips with
multiple groups arriving and going at the same time. E.g. The Golden Triangle (Delhi-Agra-Jaipur) may
be visited for a week on the second, twelfth, and twenty-second of every month by groups of 20 people.
He promises the hotel that it will receive this kind of business each month for the next 12 months.

9. Travel Agent Rate: Travel agents contribute a sizable amount of business to hotels that provide them
special discounts and compensation, such as Cox & Kings and Thomas Cook. They sell travel products
like hotel rooms, airline reservations, etc. on a commission basis to the end users (guests).

10. Company Volume Guaranteed Rate (CVGR): Hotels might provide a special rate (below the going
rate) in order to draw a lot of business from a certain market niche. When a specified number of nights
in a guaranteed number of rooms is needed, it is granted. It is crucial that the business make sure the
room night output is kept up.

11. Airline Crew Rate:It is a special discounted rate for the crew of one or more airlines that consistently
and continuously offers a particular volume of business throughout the year.

12. Government rate: Government personnel typically receive a daily stipend from their employer for
travel, lodging, and food, and some hotels will offer them a rate that includes a room and lodging.

13. Educational Rate.Hotels that cater to travelers on a tight budget like students and educators often
offer special prices called "educational rates." Due to the volume and regularity of their visits, they are
important sources of revenue.

14. Membership Rate. Members of powerful organizations that bring a lot of business to hotels are
granted membership prices. The membership rates are significantly less expensive than the rack rates
and may also include a discount on food and beverages.

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15. Introductory Rate. When a new building in town opens, a hotel offers it. The introductory rate is often
provided up until the hotel is fully operational, after which it may be discontinued at the management's
discretion.

16. Complimentary Rate. A hotel offers a "complimentary rate" when it does not charge a guest for their
accommodation. Presented to travel and tour operators. Additionally provided with the wedding
package and bulk reservations.

17. Crib Rate. This is the price for kids who are traveling with their parents and are over five but under
twelve. A crib is a tiny bed with a safety rail.

18. Package Rate. A combination of one or more hotel products or services supplied as part of a package
by the hotel. is also known as bundling. Room rental, meals, special arrangements, as well as goods
and services provided by other service providers, such as transportation (by train, road, and air),
sightseeing, and other things, may all be included in the package fee. The next bundle might be
available from the hotel. packages for meetings, meals, weddings, and vacations.

 Meeting package: A full meeting package includes lodging for the attendees, a meeting space, all
food and drink needs (meals, tea/coffee, snacks), as well as transportation services and audio visual
equipment like projectors, etc. for the attendees.

 Meal package:The combination of room rent and meals, which may include all meals or a mix of
breakfast and lunch/dinner, is known as a meal package. Depending on the needs of the visitors and
the compatibility of the hotel's operations, the hotel may provide meal packages. In the section that
follows, there is a detailed discussion of the various meal plans that hotels provide.

 Marriage package: A marriage package covers all of the preparations required for the wedding, such
as the man dap, priest, party venue or lawn, lodging for the wedding party, planning for the reception
buffet, and even a free room or suite for the newlyweds.

 Holiday package: A vacation package may include travel, lodging, food, a guide, and sightseeing
while at the location. This bundle typically includes non-hotel items from other service providers,
such as airlines.

MEAL PLANS:

1. European plan: The European plan (EP) solely covers the cost of the hotel; actual meal costs are
charged individually.

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2. Continental Plan: The Continental Plan (CP) includes a continental breakfast in the accommodation
fee. Continental breakfast items include croissants and Danish pastries, sliced bread with butter, jam,
honey, and cheese, rolls, fruit juice, and coffee, tea, hot chocolate, or milk.)
3. The Bermuda plan, often known as bed and breakfast, includes both room rental and an American
breakfast.
4. Modified American Plan is also referred to as demipension (Half Board). The accommodation rental
fee is combined with breakfast and one substantial meal (either lunch or dinner).
5. American plan: The American plan (AP), commonly referred to as full board or en pension, comprises
accommodation and board as well as all meals (breakfast, lunch, and supper).
INCLUSION
PLAN NAME
ROOM RATE BREAKFAST LUNCH DINNER

European Plan Yes No No No

Continental Plan Yes Yes No No

American Plan Yes Yes Yes Yes

Modified American Plan Yes Yes Either Lunch or, Dinner

The use of these plans:

Commercial hotels prefer EP/ CP/ BP because:

 Commercial hotels are located in cities, therefore there are almost certainly going to be lots of
eateries nearby. The guest will therefore like to keep his options open in terms of meals. Additionally,
the hotel might not serve the guest's preferred cuisine.

 The common plans used in commercial and transit hotels are EP, CP, and BP. Most of their clients
are businessmen, who often have their main meals at independent eateries. There are a lot of walk-
in visitors to the commercial hotels as well.

 On the other hand, a hotel located in a city would have a lot of chance patrons in its eateries. As a
result, their F&B revenue is not limited to hotel guests. However, only groups sent by travel agents
and business reservations for conventions, seminars, etc. are eligible for their meal-inclusive plans.

Resort hotels prefer AP/ MAP because

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 They might be located in a remote place without many restaurants around. Therefore, guests prefer to eat
in the hotel. An MAP will be better suitable for tourists that want to explore during the day.

 Since the hotel solely receives revenue from its resident guests for its food and beverage expenses, the
arrangement benefits the hotel itself.

ROOM TARIFF FIXATION

Setting the lodging rate is a challenging undertaking for the management. If hotel management sets a
low room rate, the business may not be profitable. However, if the price is too exorbitant, visitors might choose
not to use the facility. Consequently, one requirement for managing a successful hospitality business is setting
accurate and competitive room rent.

BASIS OF PRICING:

1) MARKET BASED PRICING. It is setting a price based on value of the product in the perception of
the customer.

a) Competition: Rates for hotels that meet the same standards and offer almost identical services
and amenities to those offered by other hotels located in the same area of the city must be
competitive (while also being able to generate enough money to cover fixed obligations).

b) Rate Cutting: lowering of rates to increase occupancy level, especially during off season also at a
time of the year or day of the week when you need business.

c) Guest Requirements: Different room rates depending on the needs of the guest, such as early
check-in on a CP basis or late check-out on a MAP basis. The hotel will offer its guests a number
of amenities, including carpeting, air conditioning in all of the rooms, a swimming pool, tennis
court equipment, conference space, lobbies, lawns, parking spaces, special aspects of
Continental and Indian cuisine, cutlery and crockery, and modern machinery.

d) Market Tolerance: Comparing the best accommodation rates at competing hotels. Hotels can
learn these rates by calling the rival properties while keeping their identities a secret.

e) Inclusive and Non Inclusive Rates: Charging room rates on the basis of meals provided on a
CP/MAP/AP basis.

2) COST BASED PRICING: It’s based on cost incurred

a) Rule of Thumb Approach: The rate of room rent is set at one rupee for every rupee spent on
building and furnishing the room. 'Cost rate formula' is another name for this. Consider the
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example of supposing that a hotel room will cost $4,000,000 to construct. An average selling price
of P5,000 is obtained when using the 50 per 50,000 method.

b) The Hubbart Formula is the conventional method for calculating a hotel's room rate. developed in
the 1940s in America by ROY HUBBART while taking into account running costs, room sales, and
anticipated return on investment.

HUBBART FORMULA

Hubbart formula is useful because

It gives the hotel's owner a sufficient return.

Covers the fixed expense of the hotel.

thought about the hotel's operating expenses

Accounts for every revenue source other than hotel rooms.

produce a specific and acceptable rate objective

STEPS IN USING HUBBART FORMULA

1.Owners' Capital plus Loans equals Total Investment Return on Investment (ROI) equals Total
Investment X Return Percentage

2. Total expenses are equal to operating expenses (which include costs directly related to renting,
maintaining, and serving meals in rooms), taxes, and insurance, plus the interest on loans and
depreciation on book value.

3. Gross Operating Revenue = All Expenses + Return on Investment

4.Calculate non-room revenue: The hotel can benefit from its food and beverage department, phone
toll fees, or laundry.

5. Gross Operating Revenue - Revenue from other sources (such as food and beverage sales, laundry,
rent and lease of the hotel area, fitness center, etc.) equals the revenue that will be generated by a
room.

6. To determine the total number of rooms available throughout the year, multiply the hotel's room
count by the number of days in the year. Make a provision for the annual average vacancy that is
anticipated. The total number of rooms along with the number of days in the year will be provided in
this phase.
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7. Average daily rate (ADR) = Revenue generation from room/total no of rooms.

LEARNING ACTIVITIES

Online Activity #1

1. Knowing the different meals plans that most hotels are using, search the net and try to find out
hotels in the Philippines using the same meals plan.

ASSESSMENT

Define the following terms;

1. European plan - ______________________________________________________________________

2. American Plan - ______________________________________________________________________

3. Hubbart Formula - _____________________________________________________________________

4. Day and Half Day Rate - ________________________________________________________________

5. Rack Rate - __________________________________________________________________________

6. Educational Rate - _____________________________________________________________________

7. Market-based Pricing - _________________________________________________________________

8. Bermuda Plan - _______________________________________________________________________

9. Crib Rate - ___________________________________________________________________________

10. Government Rate - ___________________________________________________________________

REFERENCES

1. Colin Dix and Chris Baird. Front Office Operations, Pearson Education Inc Publishing 4th Edition

2. 2. Elpedia Marte Lago. Front Office System and Procedures. Minshapers Co.Inc. 2010

3. 3. Anutosh Bhakta. Professional Hotel Front Office Management. Mcgraw Hill Education Private Limited.

4. 2012
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RUBRICS

Points
Criteria
16-20 pts 11-15 pts 6-10 pts 1-5 pts 0
Depth of shows that they have Show that you Show only a Demonstrate No
Answer carefully and consciously have thought cursory little of no submission
considered the questions. about the knowledge of understanding
question. the question of the question

Detail and -provided with a thorough There may be Some portions Vague or NO logical
Organization response hazy need further confusing analysis
- The analysis is well- presentations clarification, and was
structured. of ideas. ideas should be provided.
- Some presented in a
questions more
weren't fully comprehensible
addressed. way.
Grammar No obvious error a few spelling Has numerous has multiple No
and spelling and/or grammatical typos and/or submission
grammar and/or spelling grammar
mistakes that mistakes errors
do not affect
understanding

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Module 5: ROOM STATUS

LEARNING OUTCOMES

1. Know the process of assigning the rooms to the guest during the arrival phase
2. Be familiarize with the different types of hotel rooms and its features
3. Determine the room status and how it is reconciled
4. Use room status codes in reservation and registration
5. Explain the system of departmental notifications and records

MODULE CONTENT

1. Room Status Board

2. Types of Rooms
3. Room Status Reconciliation
4. Room Status
5. Room Status Code
6. Room Status Cycle
7. Notifications and Records

ROOM STATUS BOARD

When a guest arrives, the procedure of assigning them a room is mostly based on the status of the
room, the availability of rooms, and the room rates. The front desk department is notified of the room's status so
that it can be sold to a guest. The housekeeping department is notified so that it can prepare used rooms for
resale to customers. The maintenance, engineering, and safety departments are also notified so that they can
service all equipment and get it back in working order.
The process of assigning rooms
The terms related to room status are
 Free sale - rooms for sale are available
 In a "minus position," more guests are expected than there are rooms to accommodate.
 Plus position: When available rooms exceed the number of guests arriving
 "Sold out - No rooms left,"
 "House count" refers to the total number of hotel guests.
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 Walk-in customers are those who arrive without making a reservation.

 A wake-up call is a voicemail sent by the front desk staff at the guest's requested time.
The front desk employees will find these phrases helpful while interacting with visitors, and staff
members should be familiar with all related terminologies to ensure that guest services are provided in the best
way possible. Additionally, because rooms are referred to as perishable goods, the sale of rooms must be
handled with the utmost care to ensure that the staff in all departments provides services quickly and efficiently.
Front of the house and back of the house operations are carried out with proper staff coordination across all
departments and the best possible use of all available resources.

Determining Guest Needs: To accommodate guests' demands, each hotel offers a selection of
accommodations. A single traveler prefers to book a single room to save money, whereas a couple prefers the
convenience of a double room. To provide kids greater room to wander about, a family might have to choose a
suite. A company boss can desire a unique suite to entertain clients in secret or flaunt the financial situation.

Room types are based on intended number of occupants. It is assumed that the typical room type
only accommodates one person. It's known as single occupancy. One bed is in the single room type. Even if it's
not always the case, single occupancy prices are frequently less expensive than double occupancy rates.

Triple occupancy rooms are priced for three people, whereas a quad occupancy home may
accommodate four people. More than four individuals rarely stay in a typical room.

The types of rooms are:

1. Ordinary Rooms :
 Single room
 One person's private room.
 For single occupancy only.
 A bed measuring roughly 6 feet by 3 feet.
 Twin room
 Two single beds are in one room.
 It is for two people to share.
 Typically, each bed is 6 feet by 3 feet in size.
 It is appropriate for meeting delegates to share housing.
 Triple room
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 Three distinct single beds are in one room.

 Three visitors may stay there for triple occupancy.
 It is appropriate for groups and conference visitors.
 Quad room
 There are four individual single beds in a room.
 It has room for four people to stay in one at a time.
 Double room
 There is a double bed there.
 It is for two people only.
 The average bed is 4.5 feet by 6 feet in size.
 Double-double room
 Two double beds are present.
 It can fit four people inside together.
 A family or group will typically like it.
 Hollywood twin room
 Two single beds in one room share a same head board.
 It is typically occupied by two people or visitors.
 Queen room
 There is a queen-sized bed in a queen room.
 The bed measures 5 feet by 6 feet in size.
 Extra beds are offered upon request.
 King room
 King-sized beds are seen in king rooms.
 The bed is six feet by six feet in size.
 On request and subject to an additional fee, an extra bed may be added to this room.
Suite Rooms :
 Suite room
 A suite consists of many rooms.
 Living room and bedroom areas are distinct in one room.
 a living room or parlor that is attached to one or more bedrooms.
 The design and color scheme are what give it its name.
 A room made up of two independent, contiguous rooms.
 Aim to please the wealthy (affluent) visitor.
 For those who can afford the high lodging category fee (rate).
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 Junior suite
 It is a suite room of a modest size.
 A small room with a bed and a couch.
 The sleeping area could be separate from the parlor or living room, or it could be in a bedroom
 .Single suite
 A room designed for a solitary person.
 A space with a sitting area and a bedroom.
 Double suite
 A room designed for two people.
 There is a sitting area.
 Duplex suite
 There are two rooms in this kind of suite.
 which are spread across two storeys.
 It was connected by a staircase within.
 Penthouse suite
 A space that has a terrace or an open sky.
 It is situated on a hotel's top floor.
 Its furnishings and décor are extravagant (lavish or luxurious).
 It ranks among the most expensive hotel rooms.
 It is favored by prominent figures and celebrities.
 Deluxe room / Suite
 A room in the hotel provides a nice view.
 It has a larger room and gives a high level of comfort.
 Although it is not a suite, the room has a bedroom and a small living area.
 Cottages – suite
 A separate group of rooms separated from the hotel's main structure.
 Every home features a balcony, a living room, and a bedroom with a bathroom connected.
 It could have a dining room and an attached kitchen.
 It is frequently present in resort hotels.
 Hospitality Suite
 It is frequently present in resort hotels.
 A room that a visitor rented on an hourly basis to amuse his visitors.
2. Special Category Rooms/Other Types Of Rooms :
 Studio room
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 Generally used as a living room.

 A room with a bed & convey in to sofa – cum – bed.
 Cabana room
 A room next to a beach or swimming pool
 Mainly utilized as a changing area; not a sleeping area.
 Parlour rooms
 An apartment without a bed.
 It might have a sofa and chairs for seating.
 Lanai room
 It typically overlooks a garden or a beach.
 A furnished veranda or covered patio that serves as a living room.
 Corner room
 A room that is situated on the hotel building's corner.
 Typically, it has two exposures (views).
 Conference room
 A room as different size having different capacity to accommodate .
 For conference, meeting etc.,
 Banquet halls/room
 Its used to entertain banquet (function) guest.
 Specially for parties, receptions, and wedding etc.,
 Inter-connecting room
 A room having its own exterior entrance door.
 Between the rooms is a connecting door.
 The guest does not have to pass through the hallway to switch between rooms.
 It may be offered for sale as two distinct rooms during periods of high demand.
 Adjacent room
 It's a room that's just next to another one, possibly across the hall.
 There is not a shared wall between them.
 Adjoining room
 Two or more rooms side by side without connecting door between them.
 Secretarial room / business centre
 It usually found in 5 star hotels.
 It specially meant for business people.
 This room provide the services like Typing, Photocopying, Fax & Steno services.
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 Efficiency Room
 A sort of complete self-sufficient unit itself .
 It usually found in hill stations and beaches.
 This room contains a bedroom, Living Room, Dining Room, A Small Kitchen & Bathroom

Based on the rooms available and the room requirements, the room allocation has to be decided by
the staff for assignment of rooms.

ROOM STATUS RECONCILIATION

Before introducing the next portion, it was crucial to undertake the guest room review. Hotels keep a
careful eye on every single guest room. All room types, configurations, and designations are for sale because
that is the purpose of their operation. Identifying which guest rooms are available for sa le and when is the most
crucial part of this monitoring process. The obvious embarrassment of checking two guests into the same room
is avoided, and by selling every available room as soon as it becomes available, room revenue is maximized.
Every guest room has a status according to the hotel industry. A hotel can control availability by reconciling the
status of the guest rooms.
Reconciling room status is the process of making sure that rooms are accurately identified by their
present state and given a new status as it changes. The front desk and cleaning keep track of each room's
status. In order to optimize room revenue and prevent missed assignments, each works in concert with the
other to ensure that rooms are allocated, cleaned, and reassigned. The states of occupancy, cleanliness, and
exception are used to categorize the many room status classifications and designations. The status codes for
occupied, vacant, filthy, clean, ready, and out of order rooms are the most often used ones.

STATUS OF ROOMS

State of Occupancy
 Occupied – applies to a room that has been assigned to a guest and that guest has checked in
 Vacant – the guest has checked out of the room
 Ready – room is available for new occupancy

Status of Cleanliness
 Dirty – room has not been cleaned by housekeeping
 Clean – room has been cleaned but not yet verified as clean
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Status of Exception
 Out of Order: A room that has undergone repairs or renovations and has been taken off the market.
The "life cycle" of a guest room can be viewed in terms of the room status. Identifying a guest room's
"readiness" for fresh occupancy is necessary for describing its condition. A hotel must therefore be aware
of its present occupancy and cleanliness levels. When determining the state of a room, including its
cleanliness and its occupancy,
ROOM STATUS CODES
 OCC - Occupied
 VC - Vacant & Clean
 VD - Vacant & Dirty
 OR - Occupied & Ready
 OC - Occupied & Clean
 OD - Occupied & Dirty
 CO - Check Out
 OOO - Out of Order
 DND - Do Not Disturb
 V/O or O/V - Status Unclear
 LO - Lock Out Room
 DO - Due out Room
 DNCO - Did not Check Out
 VCI - Vacant, Cleaned & Inspected
 HL - Heavy Luggage
 LL - Light Luggage
 NL - No Luggage
 DL -Double Lock
 CL - Chain Lock
 HU - House use
 NCI - Newly checked In
 NS - No Show
 SO - Slept out
 BLO - Blocked
 V -Vacant Room
 MUR - Make Up Room
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 VR - Vacant & Ready

STATUS CODE MEANING

Vacant / Ready Available for sale. A “V/ R” room status is the only status a room can be sold in.
Vacant / Clean Room was cleaned, but not yet examined. A housekeeper cleans every sleeping
area, which is subsequently checked by a manager or supervisor to make sure
it's ready for sale. The code is then changed from "V/ C" to "V/ R" by these
inspectors.

Vacant / Maintenance For whatever reason, a "V/ M" room has been removed from the inventory. This
is the number given to rooms that are out of commission.

Vacant / Dirty Guest checked out, however housekeeping has not yet been handled.
Housekeeping is given special importance for "V/D" codes since they need to be
ready for resale. Current Occupied/Dirty Guests

Occupied / Dirty The room is now occupied by a guest, the night has gone, but housekeeping has
not yet cleaned it.

Occupied / Clean The room is now occupied by a guest, and housekeeping has already cleaned it.
Normally, no one checks the cleanliness of a guest's room while they are a
guest. All rooms are expected to be thoroughly cleaned, but it's usually simpler to
clean an occupied room than one from which a guest has checked out.

ROOM STATUS CYCLE

The front office department's responsibility to provide high-quality service is considerably more crucial
than most people realize. As a result, the front office team must work around the clock to provide guests with
efficient service. The front desk and housekeeping staff's prompt and outstanding service will make it possible
to reserve rooms for visitors and put them up for sale, increasing the hotel's earnings.

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Figure 5. Room Status Cycle

NOTIFICATIONS AND RECORDS

A system of departmental notifications and records must be maintained in order to guarantee that the
needs of the visitor and management are met. These notifications and records present no issues whatsoever if
computers are used. A practical distribution strategy would be to install a VDU in each pertinent department.
Instantaneous updates to the arrival and departure circumstances are possible, and room changes can be
recorded without a lot of paper effort. If necessary, the other departments can also request information from the
computer and so save time and effort.

Arrival List

An alphabetical arrival list that includes the names of all visitors, their lengths of stay, and any special
needs they may have is often created one day in advance. Both the porter and the telephone operator will find
this list helpful. The telephonist may respond to inquiries from persons concerning the arrival of specific guests,
and the porter or information desk will check if there are any messages or letters for guests arriving. Typically,
tour participants or conference attendees are listed individually under the booking agent's name.

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Figure 6. Arrival List

House/Room List

Every evening, the reception crew typically creates an alphabetical guest list. Then it is dispersed
across the hotel, albeit some divisions might just periodically check it. There is little need for the kitchen to
receive a copy, but the telephone department, porter's desk, and reception will need to refer to it frequently. The
property management system has a list of visitors staying at the home. It is updated continuously when visitors
check in and exit. Any department can consult the list on the property management system if they need details
on an in-house visitor.

Departure List

The night audit prints out a departure list that lists the expected departures for the following day. If they
want to check out early in the morning, this permits the night audit to make sure that all departing guest
accounts are current. This list is particularly crucial for the Housekeeping department because it determines
how much labor is assigned each day.

Function List/Tour List/10-Day Forecast

The front desk will send out a list of the events and tours that are scheduled for the next 10 days once
every week. The 10-Day prediction is the name given to this list. In essence, it helps with the overall planning of
staffing levels and ensures that staff is aware of anticipated levels of occupancy in the upcoming week.

Call/Papers/Early Morning Tea (EMT)

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The front desk may have a chart kept at the reception area that lists the precise time that guests would
like to be called in the morning, the newspaper they would want, and whether they would like an early cup of tea
or breakfast. Semi-automatic equipment is increasingly deployed in this region to reduce the strain on personnel
during the morning peak. In smaller hotels, alarm clocks and tea-making supplies will be provided in the guest
rooms. Also provided in each room are paperwork that guests can fill out and hang outside the door at night to
order breakfast.

Modern telephone systems will have an automated early call system. This will educate the visitor to set
a wake-up time using the telephone buttons utilizing audio prompts. The more effective systems will determine
the guest's nationality from the property management system (PMS) in the front office and provide instructions
in that language. This can be very helpful for visitors who speak little or no English, like those from Japan or
Russia.

Figure 7. Part of an early Call, newspaper and early morning tea

sheet

Guest History Records

To keep track of each individual guest's stay and to note their preferences, luxury hotels have long
employed guest history cards. Many hotels believe the expenses of maintaining a guest history system exceed
the advantages. The use of a customized system for frequent guests of the hotel or making sure that guest
history is included in a computer reservation program, where it can be quickly analyzed for more effective
marketing or utilized to provide a more individualized service, can help ease this.

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Figure 8. Guest History

Since the advent of computers, the majority of hotels now enter their guests' history information into
their computer reservation systems. This will make it easier to get any information needed and determine what
steps should be taken to ensure that all of the hotel's frequent visitors have a pleasant stay.

Group rooming list

A group rooming list is sent to each department as soon as a group checks in so that any questions
can be answered. These listings contain each group member's name and room number. This list can be
created prior to check-in if group members have already been assigned rooms, which will help the porters with
luggage distribution.

Move notification

Moves from one room to another require an individual notification because the records of each
department need to be updated.

Figure 9. Move Notification

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LEARNING ACTIVITIES

Online Activity #1
Conduct an online search to find relevant articles, blog posts, or websites related to hotel room status. Gather
the key points, insights, and best practices. Take notes and create a document summarizing your findings.
Make a presentation and be ready for the presentation on the next online meeting.

ASSESSMENT

Review Questions
1. What are the typical room status categories used in hotels? Provide a brief explanations each.
2. How does the front desk update room statuses during the guest’s stay and upon departure?
3. Describe the procedure for placing a room in “out-of-order” status and reasons why a room might be
marked as such.
4. Expalin the importance of effective communication between thr front desk and housekeeping regarding
room statuses.
5. Describe the process of room status reconciliation and the role of the front office in this procedure.
6. Draw the room status cycle diagram and explain.

REFERENCES

1. Colin Dix and Chris Baird. Front Office Operations, Pearson Education Inc Publishing 4th Edition
2. Elpedia Marte Lago. Front Office System and Procedures. Minshapers Co.Inc. 2010
3. Anutosh Bhakta. Professional Hotel Front Office Management. Mcgraw Hill Education Private Limited.
2012

RUBRICS

POINTS
CRITERIA
16-20 pts 11-15 pts 6-10 pts 1-5 pts 0
Extent of Demonstrates a The students There is limited There is little There is
Answer complete and demonstrate an understanding of no no
conscious understanding of of the question understanding submission
understanding of the the question of the question done
questions
Detail and - Answered with a high Ideas are mistily Some sections Vague or No
Organization level of detail presented lack details and confusing presented
- Analysis is well- - Some questions ideas need Analysis
organized not answered in better
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detail presentation to
be more
understandable
Grammar No error A few errors in The answer has Numerous There is
and spelling grammar and/or several errors errors in no
spelling but they in grammar grammar submission
do not interfere and/or spelling and/or spelling done
with that interfere
understanding with
understanding

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Module 11: GUEST ACCOUNTING

LEARNING OUTCOMES

1. Identify the principles of guest billing

2. Examine the method of preparing guest bills
3. Explain the basis of accounting systems
4. Learn to handle transactions between the guests and the hotel accurately
5. Learn how organize and report the transaction information.

MODULE CONTENT

1. Guest Accounting
2. Types of Accounts
3. Folio and Types
4. Posting and Types
5. Vouchers and Types
6. Account Settlements
7. Evaluating front Office Operations
8. The Daily Operations Report
9. Yield Management

GUEST ACCOUNTING

Any business or organization's accounting department keeps track of, logs, and oversees the financial
dealings the company has with its clients and customers. Any business's accounting department directly
manages its finances and keeps tabs on its performance. For the management to make wise judgments, it is
helpful.

Accounting is the control of costs and income in the hotel industry. It gives the visitors clear information
so as to prevent any unpleasant shocks.

A guest account serves as a record of any financial dealings a guest has with the hotel.When guests
confirm their reservations or register at the front desk, their accounts are created.

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The front office accounting team follows a structured procedure to identify, record, measure, classify,
verify, summarize, interpret, arrange, and communicate financial data for a hotel business. This process is
known as front office accounting.

In the simplest form, a front office account resembles English alphabet ‘Block-T’.

Account Name

Charges Payments

The charges are entered on the left side of the "T" in front office accounting. The account balance is
raised. On the right side of the "T," the payments are inserted. They reduce the balance of the account.

Basic Front Office Accounting Formula

Net Outstanding Balance = Previous Balance + Debit – Credit

Where debit increases the outstanding balance and credit decreases it.

Most of the contemporary hotel businesses employ automated accounting system.

TYPES OF ACCOUNTS

There are following typical accounts in hotel business dealing with customers −

 Guest Account
 Non-guest or City Account
 Management Account

Difference Between Guest and City Account

Here are some prominent differences between a guest and a city account −

Guest Account City Account

It is a record of all payments made by It is a record of all financial transactions between guests and the
visitors to the hotel. hotel that aren't their own.

When a reservation or registration is It starts when a customer doesn't pay the whole amount of their bill
made, it is created. upon checking out.

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It is maintained by the front office It is maintained by the Accounts section in back office.
completely.

It records all financial transactions of a It records financial dues not paid or partially paid by the guests at
guest from check-in till check-out. the time of check-out from the front office to the back office.

Guest account is compiled on a daily City account is compiled on a monthly basis.

basis.

Management Account

Some hotels permit the managers to address the questions, complaints, or any potential commercial
deals raised by customers during a brief conversation. For instance, if a guest has a problem with a hotel policy,
the manager will call the guest and try to fix the issue over coffee or a drink. The management account is then
updated with the costs associated with this interaction.

FOLIOS AND TYPES

A folio is a record of each transaction that has occurred in a particular account.

The front desk personnel records all interactions between the visitor and the hotel on the folio. The
folio is opened with no initial balance. The amount in the folio then increases or decreases based on the
transactions. As soon as the money is settled at check-out, the folio balance must be zero.

Types of Folios

There are following major types of folios −

 Guest − assigned to collect money from particular visitors.

 Master − charge given to a group or organization.

 Non-guest − for a visitor who is not a resident.

 Employee − charged to a hotel employee's privileges at the coffee shop.

POSTINGS AND TYPES

'Posting' of transactions refers to the procedure of entering the entries on the folio. There are basically
two different posting types:
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Credit − They lower the balance owed by the visitor. These entries may include full or partial
payments as well as token changes.

 Debit − They raise the balance owing on the guest account. Charges for restaurants, hotel services,
health clubs/spa, laundromats, telephone calls, and transportation are included in debit entries.

VOUCHERS AND TYPES

Vouchers are thorough written records of a transaction. From its point of origin, it moves the
transaction to the front office. To let the front desk know that a guest has made a purchase or used any hotel
service, a voucher is employed.

The following typical vouchers are used in the hotel −

 Receipt of Cash Voucher

 Complimentary Voucher
 Charge Coupon
 Petty Cash Receipt
 Allocator's Note
 Order for Unrelated Charges (MCO)
 Voucher (VPO) for Payment
 Voucher for transfers
Here are some typical vouchers:
Figure 14. Petty Cash Voucher

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Figure 15.Payment Voucher

LEDGER AND TYPES

The ledgers are a group of accounts. There are two ledgers the front office handles −

 Guest ledger − A collection of each guest account that is currently staying at the hotel.

 Non-guest ledger − A set of all unsettled, departed guest accounts.

There are two other types of ledgers used in the hotel. Both types of ledgers are used by back office
accounting section as given −

 Receivable ledger − After guests check out without paying the bills, the back office accounting staff
mails them to them and makes sure the payments for the services were made.

 Payable ledger − The staff manages payments made by guests to the hotel in advance for use on
future purchases of goods and services.

ACCOUNT SETTLEMENTS

There are various issues regarding account settlement −

Orientation of Account Settlement

By Guest − The guest settles own account by cash/credit card/cheque.

By Organization − The organization settles guest account by transferring money to the hotel account.

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Methods of Account Settlement

There are following popular methods of account settlement −

Account Settlement in Local Currency − A guest can pay in terms of a local currency where the
payment is not chargeable with conversion fees.

Account Settlement in Foreign Currency − The service of payment through the bank will cost
between 3% and 6% of the total amount due if the guest wishes to pay in foreign currency.

Account Settlement Using Traveler Check − A smart alternative to paying in cash is to use
travelers' checks, which are pre-printed checks available in the denominations of most major international
currencies.

Debit Card − Payments against accounts are currently most typically made via magnetic cards. In
that they are paid straight from the guest's bank account to the hotel's bank account, debit card payments are
equivalent to cash payments.

In the event of a credit card settlement, the accounting staff should provide the credit card company
the charge vouchers that the visitors have signed, preferably within a certain amount of time. Following that,
the credit card company settles the guest account by making a payment against it.

Credit Settlement by Organization −Numerous national and international private or public

companies send employees or students to attend workshops, seminars, or gatherings. Together with the hotel,
these companies pay the employees' invoices on credit. The organizations make bookings for lodging based
on the number of room nights (number of rooms divided by number of nights the representatives are
anticipated to stay). The phrase "account settlement using direct billing" refers to this approach.

The front desk staff checks visitor folios as part of direct billing account settlement and moves the
guest account to a non-guest or city account. In order to receive the direct billing amount from a direct billing
agency like an embassy, university, or other entity, the hotel's back-office accounting department must verify
the guest folios.

The accounting department additionally informs the guests that they will be responsible for paying the
charges out of pocket if the direct billing agency is unable or unable to do so.

Combination Account Settlement – A guest may settle their bill by paying a portion in cash and the
balance on credit. For this type of payment, the front office staff must create the supporting documentation
before turning it over to the back office accounts.
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GUEST FOLIO

The folio is the guest account or hotel bill. If open, you can post charges and payments from guests,
companies and non-residents to the folio (hotel bill).
Room No. ____206________________

Mr & Mrs. Wells__________________

_______________________________
_______________________________

Date 01 – 05 - 22 01-06-22 01-07-22

Accommodation & Breakfast 4,500 00 4,500 00

Dinner 1500 00
Teas/Coffees 850 00
Other Foods
Bar Drinks 2000 00
Wines
Newspaper 110 00 110 00
Telephone 350 50 455 25
Spa 3,500 00

Daily Total 8,000 00 9,310 50 565 .25

Cash 4,500 00 -
Brought Forward 3,500 00 12,81 50
0

Carried Forward 3,500 00 12,81 50 13,37 75

0 5

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EVALUATING FRONT OFFICE OPERATIONS

Evaluation of front office operations' performance is a crucial managerial task. Managers won't know if
the front office is meeting objectives without carefully examining the results of operations. Effective front office
managers monitor departmental performance on a daily, monthly, quarterly, and annual basis. The key
instruments front office managers can use to assess the effectiveness of front office operations are covered in
the sections that follow. These tools consist of.
 The daily operations report
 Occupancy ratios
 Rooms revenue analysis
 The hotel income statement
 The rooms schedule
 Rooms division budget reports
 Operating ratios
 Ratio standards

THE DAILY OPERATIONS REPORT

The daily operations report, often referred to as the manager's report, daily report, and daily revenue
report, provides a 24-hour financial summary of the hotel. In order to reconcile cash, bank accounts, revenue,
and accounts receivable, use the daily operations report. The report offers crucial information that must be
entered to connect front and back office automated functions as well as serving as a posting reference for
various accounting journals. The format of daily operations reports varies depending on the requirements of
each hotel property.
A part of a typical daily operations report's room statistics and occupancy percentages. Statistics on
the daily operations report may gain additional significance when compliments and remarks from the accounting
staff are added. For instance, when it is mentioned that valet parking sales are down yet occupancy is up,
information about the number of guests using the service become even more important. The front desk
manager might believe that the front desk is not effectively advertising the guest valet parking options.
The front desk manager and hotel general manager are not the only people who have access to the
information in the daily operations report. The hotel typically provides copies of the daily operations report to
each department and division manager.

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OCCUPANCY RATIOS
Occupancy ratios measures the success of the front office in selling the hotel’s primary product:
guestrooms. The following rooms statistics must be gathered to calculated basic occupancy ratios:
 Number of rooms available for sale
 Number of rooms sold
 Number of guests
 Number of guests per room
 Net rooms revenue
These statistics are typically shown on the daily operations report. The occupancy percentage, multiple
(or double) occupancy ratio, average daily rate, revenue per available room (Rev PAR), revenue per available
customer (Rev PAC), and average rate per guest can all be calculated from this statistics. On a property's daily
operations report, the computed occupancy percentage and average daily rate could also be shown. Normally,
these ratios are computed on a daily, weekly, monthly, and annual basis.

The front office manager often uses the occupancy ratios and occupancy data generated by the front
office system to discover trends, patterns, and issues. The front office manager must take into account how
various conditions could have various effects on occupancy while analyzing the data. For instance, the average
daily hotel rate may rise as multiple occupancy rises. This is due to the fact that the average hotel rate per
guest reduces when a room is sold to more than one person because the charge for two people in a room is
typically not double the rate for one person.

The following sections examine how daily occupancy ratios are calculated for the Gendy Hotel. Rooms
division data needed for the calculations are as follows.
The Gendy Hotel has 120 rooms and a rack rate of 4,900. (for simplicity, we will assume in this
example that this rack rate is applicable to both singles and doubles)
Eighty-three (83) rooms were sold at varying rates.
Eighty-five (85) rooms were occupied by guests. (Rooms sold does not equal rooms occupied by
guests because, on this particular day, single guests occupied two rooms at a complimentary room rate,
thereby generating no rooms revenue. Note that the handling of complimentary rooms may differ among hotel
properties)
Ten (10) rooms were occupied by two guests, therefore, a total of 95 guests were in occupancy.
Php 406,700 in room’s revenue was generated.

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OCCUPANCY PERCENTAGE
The occupancy % is the operating ratio that is most frequently employed in the front office. The
occupancy percentage compares the number of sold or occupied rooms to the total number of rooms available
for a certain time period. It is significant to note that some hotels determine this proportion based on the number
of sold rooms, while other hotels determine the statistic based on the number of occupied rooms. Certain
operational statistics, such as the average hotel rate, can alter when complimentary rooms are included in the
calculation. Depending on the requirements and history of the property, using both the sold and occupied rooms
is acceptable. To demonstrate how to calculate occupancy %, this discussion will use occupied rooms as an
example.
The number of rooms available may occasionally contain rooms that are out of order. Include out-of-
order rooms in the number of available rooms for properties whose management success is evaluated in part
on the basis of occupancy percentage to give the manager an incentive to get those rooms mended and
recycled more rapidly. Additionally, including every room offers a reliable foundation for measuring occupancy.
On the other hand, by incorrectly designating unsold rooms as out-of-order, managers may be able to artificially
enhance the calculated occupancy percentage if out-of-order rooms are not included. Since the rooms are not
for sale, some properties do not include out-of-order rooms.
Additionally, listing those rooms could unfairly penalize the front desk workers insofar as the
occupancy % is used to assess the performance of front desk staff who have no control over out-of-order rooms.
Whatever strategy is adopted, it ought to be done so consistently.
The occupancy percentage for the Gendy Hotel is calculated as follows:

GENDY HOTEL
Number of Rooms Available – 120
Rack Rate = 4,900

Number of rooms occupied

Occupancy Percentage =_________________________ X 100
Number of rooms available
= 85 / 120 X 100
= 70.8%

MULTIPLE OCCUPANCY RATIO

The multiple occupancy ratio, also known as the double occupancy ratio, is widely used to anticipate
food and beverage revenue, identify the need for clean linens, and evaluate average daily room rates. A
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multiple occupancy percentage or the average number of guests per room can be used to compute multiple
occupancy (also known as the occupancy multiplier or the multiple occupancy factor).

The multiple occupancy percentage for the Gregory Hotel is calculated as follows.
Number of rooms occupied by more than one guest
Multiple occupancy ratio =______________________________________ X 100
Number of rooms occupied
= 10 / 85 X 100
= 11.8%

AVERAGE DAILY RATE (ADR)

A measure of the average rate paid for rooms sold, calculated by dividing room revenue by rooms
sold.
ADR = Room Revenue / Rooms Sold

= 406,700/ 83
= 4,900

AVERAGE RATE PER GUEST:

Particularly resort hotels are frequently curious to learn the average rate per guest (ARG). Every hotel
guest, including children, is factored into this tariff.
The average rate per guest for the Gregory Hotel is calculated as follows:

Average Rate per Guest = Total Room Revenue

Number of Guests
= 406,700 / 95
= 4,281.05

YIELD MANAGEMENT:
Systems for managing hotel yields have emerged as an independent addition to standard reservation
systems. They operate by estimating how occupied the hotel will be on a specific date in the future. This is
accomplished by continuously tracking past booking and occupancy patterns and extrapolating them into the
future.

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